Reliance Industries Ltd. is expected to report a strong sequential improvement in earnings for the June quarter, led by a recovery in its oil-to-chemicals (O2C) business, while its retail and oil & gas segments are likely to remain subdued. Investors will also closely watch management commentary on Jio's tariff strategy, the new energy business and capital expenditure plans ahead of the telecom giant's proposed IPO.
According to Bloomberg consensus estimates, Reliance Industries' consolidated revenue is expected to rise 2.4% quarter-on-quarter to Rs 3,01,024 crore from Rs 2,94,059 crore. Ebitda is seen increasing 5% to Rs 46,367 crore from Rs 44,141 crore, while margin is expected to improve to 15.4% from 15%.
Net profit is estimated to jump 20% sequentially to Rs 20,451 crore, compared with Rs 16,971 crore in the March quarter.
The O2C business is expected to be the biggest contributor to earnings growth during the quarter. Ebitda from the segment is estimated to rise 11% sequentially to Rs 16,146 crore from Rs 14,520 crore, supported by stronger petrochemical spreads and higher gross refining margins (GRMs) at the SEZ refinery.
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Reliance had undertaken a maintenance shutdown at one of its four crude distillation units (CDUs) during the quarter. However, analysts believe the impact of lower production is likely to be offset by the benefit of a weaker rupee and stronger refining economics.
Reliance Retail's performance is expected to remain under pressure. Ebitda from the retail business is estimated to decline 2% sequentially to Rs 6,784 crore from Rs 6,921 crore as margins continue to face pressure despite steady consumption trends.
The oil and gas exploration business is also expected to report a muted quarter, with Ebitda likely to decline 1% to Rs 4,148 crore from Rs 4,195 crore due to lower production.
Reliance Jio is expected to deliver another steady quarter, with average revenue per user (ARPU) estimated to improve to Rs 216 from Rs 214 in the previous quarter. Subscriber additions are also expected to remain healthy, with the customer base likely to increase to 53.3 crore from 52.4 crore.
Analysts expect Jio's earnings growth to be driven by continued customer additions and higher ARPU as users migrate to higher-value plans.
Apart from the financial performance, investors will closely track management's commentary on crude sourcing strategy amid geopolitical uncertainties, margin outlook for the refining and petrochemical businesses, and signs of a recovery in the retail segment.
The Street will also look for updates on Reliance's new energy business, Jio's tariff strategy ahead of its proposed IPO, growth in the JioFiber business, and the company's capital expenditure and debt plans, which are expected to remain key drivers of investor sentiment over the coming quarters.
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